Fewer New Yorkers are signing leases for new apartments but that’s not bringing down rents.
Anyone who thought rents in New York City would drop this fall will be discouraged to see they are instead remaining close to record highs. That’s the takeaway from the November edition of the Elliman Report for the Manhattan, Brooklyn, and Queens rental markets.
In Manhattan, the median rent last month was $4,095 and average rent was $5,249, both of which are the third highest on record. In Brooklyn, rents slid below the August peak, putting the median rent at $3,300. However, to put this in perspective, up until June this year, the all-time record for median rent in Brooklyn was $3,300. Since June the median rent increased to new highs and is now back to $3,300.
“Rents don’t have the upward trajectory they’ve had over the prior years but they are still remaining fairly close to all time highs,” says Jonathan Miller, president and CEO of appraisal firm Miller Samuel and the author of the report.
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In Queens, the median rent in November was $3,161, which is the second-highest on record.
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The winter is typically a quieter month for leasing and consistent with this, Manhattan saw the most significant annual decline in new lease signings last month since the onset of the pandemic. Corcoran’s market report for Manhattan notes that many renters, disappointed in the lack of rent relief, responded by staying put. “This is evidenced by the 32 percent decline in lease activity when compared to October, a steeper drop than usual,” the report notes.
Corcoran’s report for Brooklyn notes that the number of leases signed in November dropped 23 percent when compared to October but was up 10 percent over last year.
In Manhattan, the vacancy rate rose for the seventh consecutive month to 2.42 percent. New development listing inventory also rose at a much faster rate than existing rentals. The median rental price for new development was $5,320.
Significantly, there was an uptick in the number of apartments leased with a concession, like the landlord paying the broker fee or the tenant receiving a month of free rent.
Miller says there’s a shift slowly creeping in, “but it’s not reflected in rents yet.”
In Manhattan, the market share of apartments leased with a concession was 16 percent in November, up from a low of around 11 percent in August and September. It’s a figure that pales compared to the record 60.4 percent of the market share with concessions seen in October 2020. In Brooklyn, the market share of landlord concessions was 21.3 percent last month, an increase on 15.5 percent in October. The concession amount also expanded nominally month over month from 1.2 to 1.3 months of free rent.
Whether this data is an indicator or lower rents ahead is unclear. It’s a repeated refrain but Miller says he believes only with the onset of a recession and significant job losses will rents fall.
In Queens, the story is a little different with the market share of rentals with landlord concessions declining for the sixteenth consecutive month. Even so, 16 percent of the leases signed in November came with a concession.
Manhattan apartments with doormen, which are a proxy for luxury rentals, showed a drop in month-over-month rents trend compared to non-doorman rents. The median rent for an apartment with a doorman fell 4 percent over the previous month to $4,789.
Bidding wars for rentals are declining and last month accounted for 13.7 percent of the market share of rentals.
Miller points out that of the apartments rented out at above the asking price, the amount paid over the asking rent was an average of 13.1 percent. As an example, if a $3,000 rental went to a bidding war, the average increase to that rent in November was close to $400. This is the highest number that’s been tracked (although this data only goes back a few years).
Emily Myers is a senior writer, podcast host, and producer at Brick Underground. She studied journalism at the University of the Arts, London, and graduated with a MA Honors degree in English Literature from the University of Edinburgh. As host of the Brick Underground podcast she has earned three awards from the National Association of Real Estate Editors.
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Expect NYC rents to fall? You're going to be disappointed by this latest market snapshot – Brick Underground